Plain packaging of tobacco products extends to New Zealand

With the commencement of the Smoke-free Environments Regulations 2017 (“the Regulations”) on 14 March 2018 we will see a significant change in the labelling of tobacco products sold in New Zealand.

In line with the “plain packaging” scheme brought into effect in Australia under the Tobacco Plain Packaging Act 2011, the Regulations prescribe the display and placement of health warnings and graphics showing the impact of smoking and support information for quitting smoking.While health warnings and graphics have featured on tobacco packaging in New Zealand for many years, the size of the warnings has been increased significantly.For example, the warning and graphic must now cover at least 75% of the total area of the front face, 100% of the back face and the total area of one side of a cigarette pack:

In relation to use of a brand name or trade mark on tobacco packaging, the Regulations prescribes the location and size of the brand name.Specifically, the brand name may take up only 1 line, be no longer than 50 mm and no larger than 14 point font size.

The Regulations are also prescriptive about how a company name may be displayed on a tobacco package.The typeface (Lucida Sans) and size (no large than 10 point font size) in which the company name may be displayed are prescribed.

What does this mean for trade mark owners?

Trade marks comprising a stylised word, device, colour or the look and feel of the layout of the package for tobacco products will no longer be able to be used in New Zealand. This means that in time registrations for such trade marks will become vulnerable to removal on the ground of non-use.

Under the Trade Marks Act 2002 (“the Act”), a registration is vulnerable to removal for non-use, at the action of an aggrieved person, if there has been a continuous period of 3 years during which the trade mark was not put to genuine use in the course of trade in New Zealand.

There may be some interesting arguments around who qualifies as an “aggrieved person” as non-use actions are routinely brought by competitors who are hindered by the existence of the registration in their use or registration of the same or similar trade mark.Under the Regulations, the nature of trade marks that may be used in New Zealand is severely limited so it may be more difficult to establish locus.

The Supreme Court has confirmed that the Act engenders a “use-it-or-lose-it” policy.Therefore, the court has no discretion not to remove a trade mark if there has been no use.

The Act does provide an extended definition of “use” which includes use of the trade mark in a form differing in elements that do not alter the distinctive character of the trade mark in the form in which it was registered.This may provide a savings for registered trade marks comprising words in a stylised form if the mark as used retains the distinctive character of the mark as registered.

For tobacco trade marks, the defence found in section 66(2) of the Act may come into play.Section 66(2) provides a discretion for retaining an unused registration if the non-use is due to special circumstances that are outside the control of the owner of the trade mark.That use is prohibited by law is clearly a circumstance outside the control of the trade mark owner.However, it may still be necessary to persuade the Commissioner or Court that those circumstances are “special” and that it is appropriate to exercise the discretion and not remove the trade mark from the Register.

By comparison, the Australian Trade Marks Act 1995 provides that the trade mark owner is taken to have rebutted the allegation of non-use if the owner has established that the trade mark was not used because of circumstances (whether affecting traders generally or only the registered owner of the trade mark) that were an obstacle to the use of the trade mark during that period.This provision would appear to capture a wider range of circumstances than those falling within the ambit of New Zealand’s “special circumstances”.

The Australian government has gone even further by providing in the Tobacco Plain Packaging Act 2011 that the allegation of non-use of a trade mark is taken to have been rebutted if the owner establishes that it would have used the trade mark in Australia on or in relation to the retail packaging of tobacco products, or on tobacco products, but for the operation of that Act.